Do Not Get Scammed by Fake Student Loan Forgiveness Programs

For the millions of Americans with student loan debt, opportunities for student loan forgiveness can be particularly welcome. Given that it is extremely difficult to discharge student loans in consumer bankruptcy, other ways to ease the burden of student loan debt might seem too good to be true. One of those too-good-to-be-true programs is in fact a scam, according to a recent report from CNBC. What is the scam? The companies offering the fake loan forgiveness opportunity are referring to it as “Obama’s New Loan Forgiveness Program.”
Read on to learn more about this fraudulent loan forgiveness program and ways to avoid scams like this one, especially if you are dealing with a substantial amount of personal debt.
Online Advertisements Offer Fraudulent Student Loan Forgiveness Opportunity
What is wrong with the advertised “Obama’s New Loan Forgiveness Program”? In short, this program simply does not exist. According to the CNBC report, “there’s no such thing.” The companies advertising this program, along with other similar programs, offer to help recent graduates and others with student loan debt to apply for loan forgiveness programs. These companies charge a fee—and take money that students in debt could be putting toward paying off their loans—for services that are actually completely free.
A recent survey conducted by Student Debt Crisis, a borrower advocacy group, along with NerdWallet, determined that around 9% of all student loan borrowers have turned to debt-relief companies in an attempt to manage their student loan payments. Of those who used these companies, 65% indicated that the debt-relief companies did not do anything to help with the borrower’s debt, and they also paid money for ineffective services. On average, student loan borrowers who paid debt-relief companies paid an average of $613 for services that, as we mentioned above, are completely free from the federal government.
What Offers to Debt-Relief Companies Make?
What services do these debt-relief companies provide? In brief, they apply for income-based repayment plans for borrowers, which borrowers can do themselves through the federal government. While it might make sense to pay someone else to help with a complicated financial situation, applying for income-based repayment of student loans simply is not one of them. The application is a straightforward one that can be completed by borrowers in a short period of time. In other words, there is no need to pay an outside company to complete this application for you.
In some cases, debt-relief companies simply advertise on the internet, and borrowers reach out to them. In other cases, the companies contact borrowers directly. According to the report, about 60% of borrowers see ads and contact these harmful companies, while around 44% actually are contacted directly by the company. In a survey of 6,363 borrowers, “more than two-thirds were familiar with ‘Obama’s New Loan Forgiveness Plan,’” the report indicates, and those borrowers believed that it might be able to help them with student loan forgiveness.
If you have student loan debt, it is extremely important to remember that debt-relief companies often scam borrowers and make fraudulent promises, and they cannot make you eligible for services that you would not otherwise be eligible for. If you have questions about making student loan payments or about managing your debt, an experienced Oak Park consumer bankruptcy lawyer can discuss your options with you. Contact the Emerson Law Firm today.
See Related Blog Posts:
Consumer Protection for Millennials

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